Just when you think you have sussed it.. Intercompany adj stuck

topcat

Hello all,

was hoping this was going to be a casual refresh of revision but can not figure out the intercomapny adjustment on cost of sales or the other income can anyone help please?

The question



The info



the answer



if anyone could help i would be greatful

thank you

tillyjbc

Hi Topcat, there's lots to remember isn't there for consolidated statements?!!!

So for Revenue, you need to remove the sale which is 480 (from selling the goods to Claw)

Cost of sales. Remove the purchase of 480 (from buying the goods from Deer), then remove the unrealised profit of half the goods left in closing inventory 480 - 100 / 2 = 190. This will increase cost of sales as closing inventory is deducted from CoS, giving net amount of -290.

Make sense? Hope I've helped and not confused you further!!

topcat

tillyjbc wrote: »

Hi Topcat, there's lots to remember isn't there for consolidated statements?!!!

So for Revenue, you need to remove the sale which is 480 (from selling the goods to Claw)

Cost of sales. Remove the purchase of 480 (from buying the goods from Deer), then remove the unrealised profit of half the goods left in closing inventory 480 - 100 / 2 = 190. This will increase cost of sales as closing inventory is deducted from CoS, giving net amount of -290.

Make sense? Hope I've helped and not confused you further!!

Hi Tilly

there is think my head is going to explode sooner or later, definitely the hardest exam i have studied for in a long long time

Thank you very much for this that has cleared it up on that part :001_smile:

Do you know where the other income of 261 comes from ?

topcat

Not to worry just sussed it , just got to find a few brain cells somewhere to remember how to it now

£1710 * 90% =1620

1800-1620 = £261